Julphar - Gulf Pharmaceutical Industries - Case Study Example

Business Julphar (Gulf Pharmaceutical Industries) Legal and Political analysis Julphar, a pharmaceutical industrywishes to expand its operations to Rwanda. Opportunities remain unexploited in the sector of pharmaceutical production. However, in order to enter into the Rwandan market, the company must abide by the legal requirements and monitor political activities in the country. Political and legal forces may expose the business to threats that may force the company to wind up. On the other hand, the authorities may offer opportunities for the newly established company. A political and legal analysis is, therefore, necessary for Julphar. Rwanda requires companies to observe patent laws. Explicit registration procedures are in order to protect the work of innovators. Since Julphar will be in exporting materials needed for the production of medicine in Rwanda, it will be appropriate for a company to consider patent issues associated with exports to Rwanda. Incentives offered by the government of Rwanda to patients provide the company an opportunity to recover the costs of producing new medicine (GTZ, 2006). The political environment in Rwanda is stable after the country emerged from the 1994 skirmishes. Political turmoil affects operations of a business because wars may erupt (GTZ, 2006). The government of Rwanda is stable with the country recording progress in exercising governance. Julphar will have an advantage because the Rwandan government supports external investors who enjoy many business incentives. When the regime in power is stable, opportunities are opened for investors unlike when the government is with dictators. Rwanda has continued to record increased GDP in the past few years. More citizens are, therefore, able to purchase goods and services. The growth implies that there will be a ready market for the company’s product (GTZ, 2006). Economic conditions in Rwanda may create opportunities or threats to Julphar. The country’s GDP has continued to improve over the years implying that the existence of a robust, ready market because consumers have the purchasing power. The social, cultural practices and taboos will equally expose the company to new opportunities or threats since they influence consumption patterns (GTZ, 2010). Industry analysis Pharmaceutical industry is among the fastest growing industries globally. The development of the industry has been by via the efforts of the government to have a higher budget for carrying out marketing research and developmental projects in the pharmaceutical industry. The industry is worth more than $734, and it is expected to grow further (UK essays, 2014).In addition, there is a number of factors have helped to the expansion of industry. Those factors include demographic, socio-cultural, political, and economic factors. Countries have continued to record improved gross domestic product. The consumption of junk food has been on the rise in the purchasing power of consumers has been on the rise given the improved economic standards. Junk food causes lifestyle diseases that have been number one killer diseases worldwide. The need to manufacture medicine that contains such conditions has created a market for pharmaceutical industries because of the numerous opportunities that exist. The United States of America controls the largest market share of the industry. In addition, the American government has invested sufficient resources in the sector; a strategy that has helped the country its leadership. The market remains unexploited in the North African and some parts of Middle East regions with competition being minimal. Saudi Arabia takes the mantle in the area, followed by followed by Iran, Egypt, and Algeria. The industry is worth more than $19 billion in Iran, $ 10 billion in Egypt and $ 8.1 billion in Algeria (Julphar, 2014). A pharmaceutical body, Pharmaceutical Supply Chain Initiative (PSCI) is responsible for ensuring that member companies adhere to value addition concept in supply chain management. The industry has reported in collaborating with governments in regions of operation during recruitment processes. The reason for the collaboration is to give the locals a chance to handle supply chain complexities (BSR, 2014). Target Market and Positioning Julphar will use concentrated target strategy in the new market. The procedure is applicable where an organization wishes satisfy the particular segment in the market (Small Business).Demographic factors indicate that prevalence cases of HIV/AIDS are very high. Almost 5% of people aged between 15 and 49 years are. In Kigali, an estimated 13% cases of HIV/AIDS are reported to other towns recorded more than 7% of the cases. The government is unable to provide affordable medicine for the infected persons due to the overwhelming numbers of people in need. It is for this reason that Julphar intends to target a particular market since it remains unexploited (GTZ, 2006). The company will position itself in the market as the best provider of affordable Anti-Retroviral medicine (ARV).Infected persons will have a brand that is not only affordable, but also meets their expectation given that currently competitors in the market have ignored their plight. Unique packaging methods will be used to differentiate the company’s medicine from those which people have been familiar with (Small Business, 2013). The market plan for a new market entails the implementation of pricing strategies and promotional strategies. Julphar will establish low prices for the medicines compared to other competitors. The strategy aims at controlling plan an extensive customer base. The products will be a market with advertising, giving free samples, organizing health fairs and through participating in community projects. The activities will be helpful in creating awareness about the company’s products (Small Business, 2013). International Competitive strategy Julphar will use low-cost strategy to compete internationally. The strategy will then be with the activities of the company. The company policy to higher competent employees has a benefit in manufacturing medicine that meets the recommended standards whereas defects are. Julphar will not have to spend many resources in providing products that match the needs of the customers. Getting rid of wastages implies that the resources of the company will be effectively and efficiently utilized. The costs incurred during the production process will hence be. The company will also be near Kigali; that is the capacity of the country. Kigali is strategically positioned and offers a ready labour market for Julphar given its population density. This will minimize costs attributed to the recruitment process. Raw materials required for production will be readily available from Kigali hence cutting down transportation costs (Hill, 2013). Experienced employees in the field will be given priority during recruitment processes. In most cases, experienced employees are very skilful and knowledgeable since they understand how the organizations operate. The origin of their skills can be of the learning curve where expertise is doing something repeatedly. Unlike freshly hired candidates who have a habit of wasting resources of the organization, experienced employees use resources efficiently (Plechero, et al., 2005). The strategy was chosen because costs and resources significantly affect the profitability of an organization. Cost is a function of profit, and its increase reduces the profitability whereas a decrease in costs leads to profitability growth (Plechero, et al., 2005). Market Entry Strategy choosing an appropriate market entry strategy is fundamental in positioning strategically business enterprises towards attaining its objectives on a global scale. Numerous factors affect the choice of entry strategy. The choice of entry strategy has consequences for other marketing game plans it hence the decision should be. Issues that need to include the mode that will be during entry, the period of entry and the target market (Hill, 2013). Julphar will engage with contractors in Rwanda to enter the region. The contractors are mainly medical practitioners who run pharmacies in the religion and understand the industry well. The contractors will be chosen based on their expertise in the field of pharmaceutical manufacturing. They should be able to understand the goals and missions of Julphar and be able to align them with their objectives. They organization should be aware of how the company supply chain system works. Adhere to the quality standards that have been set and had the financial ability to invest in a business venture (Hill, 2013). The strategy is appropriate because it has numerous benefits. Julphar will be best placed to incorporate the technology required for the success of the company since the contractors would have already invested in the domain of production. Overhead cost incurred will less since those who will be will be required to have their labour force. In addition, Julphar will have low political and economic interference given that the contracted company is locally owned. Contracting will also make accessibility to the Rwandan market much easier since the contracted company is (Hill, 2013). International Human Resource Strategy Some countries have a shortage of in the field of pharmacy. The progress and success of the industry require well-trained medical personnel. According to a report by the World Health Organization (WHO), fifty-six countries face the challenge. Absence of crucial information has led to the development of unconvincing international human resource policies hence creating the need to train medical practitioners working as pharmacists continuously (WHO, 2014). Julphar global staffing plan incorporates the application of training and retaining talented employees. The company’s policy on training ensures that contractors are with the necessary skills needed for the success of the company in Rwanda. The training programs will help them unleash their potential and effectively and efficiently manage the business venture. The company will also offer lucrative salary packages with the intention of retaining the best employees of the company who will be duties in the new market. Since some of them have to relocate to Rwanda, their job career will be raised to motivate them. Such measures will be taken to retain talented workers who may fear to transfer abroad and decide to quit the company. The policy will also improve job satisfaction since it provides employees an opportunity to progress in their career path. Those who perform exemplary in their duties will be given bonuses to improve their working morale whereas those with outstanding achievements will be honoured (Dhorte, 2010). The policy of the company was chosen because of the excellent role employee’s play in helping the organization achieve its objectives. The recruitment process will be in Rwanda through a competition that will assist the organization employee top-notch candidates will undergo vigorous training about the company’s operations (Dhorte, 2010). Conclusion The chances of Julphar succeeding in Rwanda are very high albeit challenges that exist in the country. The legal requirements in the country are very excessive, an impediment Julphar needs to consider its effects on the business. A body mandated to oversee the industry has been adamant in reviewing the many regulations the sector has in Rwanda. Consequently, this can create threats to Julphar in its course of entering the market that is large, but less exploited. The government has remained adamant to revaluate laws concerning patents and intellectual property an action that has continued to hinder innovation initiatives in the pharmaceutical industry. In addition, socio-cultural practices provide the company with both opportunities and threats. Escalating demand for drugs can be attributed to the changing lifestyle pattern currently witnessed globally. Such changes offer the industry opportunities (GTZ, 2006). Julphar enters a market that is dominantly regulated by the Rwandan government. Government interference will hamper the operations of the company and may threaten its success. Activities of the pharmaceutical industry are unique compared to those of other industries which are less regulated. The unwillingness of the Rwandan government to amend laws governing pharmaceutical companies presents a significant threat for Julpar. However, with the introduction of fresh laws regarding patent issues, the legal framework is set to encourage investments. The economic environment affects the development of the industry especially regarding taxation, interest rates, inflation rates, and foreign exchange rates. Julphar has a high chance of succeeding in Rwanda given the fact that the company intends to subcontract a Rwandan company. Many resources will not be for the start of the business. Finally, Rwanda enjoys a relatively stable political environment that promotes commercial activities. References BSR. (2014). Labour Supply Chain Integrity and Ethical Recruitment: A Perspective from IOM. Retrieved 11 26, 2014, from http://www.bsr.org/en/our-insights/blog-view/labor-supply-chain-integrity-and-ethical-recruitment-a-perspective-from-iom Dhorte, A. (2010). Attrition in the Pharmaceutical Industry: Human Resource Management’s Role and Strategy. Retrieved 11 26, 2014, from http://www.ssmrae.com/admin/images/0ea3861cf0d096caf0b1048517f1b428.pdf GTZ. (2006). Analysis of Legal Aspects of Local Pharmaceutical Production in Rwanda. Retrieved 11 26, 2014, from https://www.unido.org/fileadmin/user_media/Serv ices/PSD/BEP/Rwanda.pdf Hill, C. (2013). International Business. McGraw-Hill/Irwin. Julphar. (2014). Industry Overview: Overview of MENA Healthcare Market. Retrieved 11 26, 2014, from http://www.julphar.net/industry_overview/1 Plechero, M. Cristina C, & Davide C, (2005).The emergence of china and India as new innovation power houses: Threat or Opportunity. Small Business. (2013). Retrieved 11 26, 2014, from Small Business Toolkit: Market Analysis: http://toolkit.smallbiz.nsw.gov.au/part/3/10/49 UK essays. (2014). Retrieved 11 26, 2014, from Global Pharmaceutical Industry: http://www.ukessays.com/ essays/international-business/global-pharmaceutical-industry.php WHO. (2014). Human Resources for the Pharmaceutical Sector. Retrieved 11 24, 2014, from http://www.who.int/medicines/areas/coordination/hrpharma/en/ Read More